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Facts
The assessee filed an appeal before the ITAT, which was delayed by 274 days. The assessee had claimed exemption for long-term capital gains on the sale of shares, which the AO treated as unexplained cash credit. The initial appeal before NFAC was dismissed ex parte due to non-appearance of the assessee.
Held
The ITAT condoned the delay in filing the appeal, citing substantial justice. The Tribunal restored the appeal to the NFAC for de novo adjudication, directing that a fresh order be passed without being influenced by previous observations. The assessee was granted liberty to furnish fresh evidence and additional grounds, and was to be given a reasonable opportunity of being heard.
Key Issues
Whether the appeal should be restored to the NFAC for fresh adjudication, considering the ex parte dismissal and the assessee's request for an opportunity to present their case.
Sections Cited
143(3), 148, 68, 69C, 10(38), 234B, 234C, 271(1), 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH “DB”: AGRA
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2016-17, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] dated 16/05/2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 246A by the Assessing Officer, NFAC, Delhi (hereinafter referred to as „ld. AO‟).
At the outset, we find that there is a delay in filing of appeal by the Assessee before us by 274 days. Considering the reasons adduced in the condonation petition, we are inclined to condone the delay in the interest of substantial justice and admit the appeal of the Assessee for adjudication.
The Assessee has raised the following grounds of appeal before us:-
“1. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), NFAC has erred in confirming the reopening the assessment order.
2. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), NFAC has erred in confirming the sanction giving by the Ld. Addl. Commissioner of Income Tax u/s 151 of I.T.Act, 1961 whereas it was wrong, giving in the mechanical manner without application of independent mind.
3. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), NFAC has erred in confirming the addition of Rs. 95,20,372 under section 68 of the Act, 1961 whereas in the appellant case section 68 was not applicable.
4. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), NFAC has erred in confirming the disallowance of exemption of Rs. 95,20,372 being the long term capital gain arising on transfer of shares Capital Trade Link Ltd. Under section 10(38) of I.T.Act, 1961.
5. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), NFAC has erred in enhancing the income by of Rs. 2,38,009/- being unexplained expenditure u/s 69C on account of alleged notional commission @2.5% paid for arranging the accommodation entry.
6. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), NFAC has erred in confirming the levy of interest of Rs. 1,91,776/- and Rs. 22,99,968 respectively under section 234B and 234C of Income Tax Act, 1961.
That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of the learned AO regarding initiation of provision of penalty u/s 271(1) of I.T.Act, 1961 in the appellant case.
That the appeal as well as assessment order are against the law and facts of the case.
That the appellant craves the leave to add, amend, alter and/or delete any of the Grounds of Appeal either before or during the course of hearing of appeal.”
We have heard the rival submissions and perused the materials available on record. The return of income for the assessment year 2016-17 was filed by the Assessee on 27-03-2017 declaring total income of Rs. 4,10,340/- and claiming exemption under Section 10(38) of the Act on account of long-term capital gains of Rs. 94,59,175/-. This long-term capital gain which was claimed as exempt, arose on sale of listed company M/s Capital Trade Link Ltd. The learned AO, based on the information that he had received that M/s Capital Trade Link Ltd. was a penny stock and Assessee was one of the beneficiaries of a fictitious accommodation entry of long-term capital gains of Rs. 94,59,175/- thereon, proceeded to deny the exemption under Section 10(38) of the Act to the Assessee. Accordingly, notice under Section 148 of the Act dated 30-03-2021 was issued and served upon the Assessee. The Assessee filed her return of income on 29- 09-2021 declaring total income of Rs. 4,10,340/- and claimed exemption of Rs. 94,59,175/- as exempt under Section 10(38) of the Act on account of long-term capital gain, in response to the notice under Section 148 of the Act dated 30-03-2021. The reassessment ultimately stood completed by treating M/s Capital Trade Link Ltd as a penny stock and the sale proceeds of shares received by the Assessee in the sum of Rs. 95,20,372/- was treated as unexplained cash credit under Section 68 of the Act. The interconnected issue involved thereon was, since the amount received as sale proceeds was held as accommodation entry, the Assessee could have expended commission expenditure for earning such accommodation entry, which was estimated at Rs. 2,38,009/- and the same was also added under Section 69C of the Act in the reassessment proceedings. Since there was no appearance made by the Assessee before the Learned NFAC, the appeal filed by the Assessee was dismissed ex parte by upholding the findings of the Learned AO.
The Learned AR before us prayed for effective opportunity to be given to the Assessee before the Learned NFAC and requested for restoration of the appeal to the file of Learned NFAC. Considering the same and also considering the fact that ex parte order was passed by the Learned NFAC, we deem it fit and appropriate to restore this appeal to the file of Learned NFAC for de novo adjudication in accordance with law. The Learned NFAC is hereby directed to pass an order afresh, uninfluenced by earlier observations made by it in the impugned order on the impugned issue. The Assessee is given liberty to furnish fresh evidences, if any, and additional grounds , if any, in support of her contentions. Needless to mention that the Assessee be given reasonable opportunity of being heard. The Assessee is directed to cooperate with the Learned NFAC for expeditious disposal of the appeal by not taking unwarranted adjournments except due to exceptional or bonafide circumstances. With these observations, the grounds raised by the Assessee are allowed for statistical purposes by restoring to the file of Learned NFAC.
In the result, the appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open court on 04/12/2025.